PROSPECTUS
STOCK PURCHASE AND
DIVIDEND REINVESTMENT PLAN
Shares of Common Stock
(without par value)
The Stock Purchase and Dividend Reinvestment Plan (the "Plan") of Puget
Sound Energy, Inc. (the "Company") provides holders of shares of the
Company's Common Stock and Preferred stock, and Residents of the State of
Washington, with a convenient and economical method of investing cash
dividends and cash investments in shares of the Company's Common Stock.
Participants in the Plan may:
- have cash dividends on their shares automatically reinvested.
- receive cash dividends on shares for which they are holders of record
and make optional cash investments of not less than $25 up to $100,000
per calendar year if the Company elects to accept such cash investments.
- invest both their cash dividends and such accepted cash investments.
Shares of Common Stock purchased under the Plan may be purchased by a
Broker on the open market on any securities exchange where such shares are
traded or by negotiated transactions, or may be newly issued shares of the
Company's Common Stock purchased directly from the Company.
The price for shares of the Company's Common Stock purchased under the
Plan with reinvested dividends directly from the Company will be the average
of the high and low sale prices of shares of the Company's Common Stock on
the Dividend Payment Date. The price for such shares purchased with
Optional Cash Investments will be such average on the Optional Cash
Investment Date ("OCI Date"). The price for shares of Common Stock purchased
under the Plan, if purchased by a Broker on the open market or through
negotiated transactions, will be determined by dividing the total cost
(including brokerage commissions) of all shares purchased by the total
number of shares purchased with respect to a Dividend Payment Date or OCI
Date, as the case may be.
The Plan does not represent a change in the Company's dividend policy
which will continue to depend upon future earnings, financial requirements
and other factors.
Shareholders who do not elect to participate in the Plan will continue to
receive cash dividends, as declared, by check.
It is suggested that this Prospectus be retained for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PUGET SOUND ENERGY INC.
The date of this Prospectus is February 10, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information on file can be inspected and copied at the offices of the
Commission at Room 1028, 450 5th Street, N.W., Judiciary Plaza, Washington,
D.C. 20549; Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and, 7 World Trade Center, Suite 1300 New York, New
York 10048. Copies of this material can also be obtained at prescribed rates
from the Public Reference Section of the Commission, Washington, D.C. 20549.
Certain securities of the Company are listed on the New York Stock Exchange.
Reports, proxy statements and other information concerning the Company can
be inspected at the office of the exchange at Room 401, 20 Broad Street, New
York, New York 10005.
Neither the delivery of this Prospectus nor any sales hereunder shall
under any circumstances create any implications that there has been no
change in the affairs of the Company since the date hereof. No person has
been authorized to give any information or to make any representations,
other than those contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to
sell any securities to which this Prospectus relates in any State to any
person to whom it is unlawful to make such offer in such State.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission are hereby
incorporated in this Prospectus by reference:
1. The Company's most recently filed Annual Report on Form 10-K.
2. The Company's Quarterly Reports on Form 10-Q for the calendar quarters
since the most recently filed Form 10-K.
3. Any of the Company's Reports on Form 8-K issued since the most recent
Form 10-K.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act prior to the termination of the offering of the
Common Stock offered pursuant to the Stock Purchase and Dividend
Reinvestment Plan shall be deemed to be incorporated in this Prospectus by
reference and to be a part hereof from the date of filing of such documents.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred
to above which have been or may be incorporated by reference in this
Prospectus, other than exhibits to such documents. Requests for such copies
should be directed to Don Gaines, Treasurer, Puget Sound Energy, OBC-15,
P.O. Box 97034, Bellevue, Washington 98009-9734, Telephone (206) 454-6363
THE COMPANY
Puget Sound Energy, Inc. a Washington corporation, is an investor-owned
utility providing service exclusively within the State of Washington,
principally in the Puget Sound region. The Company's executive office is
located in One Bellevue Center at 411 108th Avenue N.E., Bellevue,
Washington 98004. The telephone number is (206) 454-6363.
DESCRIPTION OF THE PLAN
The following, in question and answer form, is a summary description of
the provisions of the Company's Stock Purchase and Dividend Reinvestment
Plan. If you wish to receive a copy of the actual text of the Plan as filed
with the Securities and Exchange Commission, please contact: Don Gaines,
Treasurer, Puget Sound Energy, OBC-15, P.O. Box 97034, Bellevue, Washington
98009-9734, Telephone (206) 454-6363.
Definitions
For your information the following terms when used herein shall have the
following meanings:
"Administrator" shall mean the The Chase Manhattan Bank , as Company or an
agent, duly appointed by the Company to administer the Plan.
"Authorization Form" shall mean such authorization form as the Company may
from time to time, or upon request, furnish to Shareholders and which shall
be returned to the Company by Shareholders to indicate their election to
participate in the Plan.
"Average Price" shall mean the average of the high and low sale prices of
shares of the Company's Common Stock as reported in the "NYSE--Composite
Transactions" listing appearing in The Wall Street Journal on the OCI Date
or Dividend Payment Date, as the case may be. Should the Exchange be closed
or shares of the Company's Common Stock not be traded on any OCI Date or
Dividend Payment Date, as the case may be, the price shall be based on the
average for the day immediately preceding an OCI Date or Dividend Payment
Date, as the case may be, on which such shares are traded.
"Broker" shall mean one or more securities broker-dealers selected from
time to time by the Company to act as independent agents for the
Participants in the purchase and sale of shares of the Company's Common
Stock under the Plan.
"Company" shall mean Puget Sound Energy, Inc.
"Dividend Payment Date" shall mean each date on which dividends are paid
on the Company's stock. These dates are usually February 15, May 15, August
15, and November 15 of each year.
"Enrollment Form" shall mean such enrollment form as the Company may from
time to time, or upon request, furnish to Shareholders or Residents who are
not Shareholders and which shall be returned to the Company together with
the initial cash investment, to indicate their election to participate in
the Plan.
"Exchange" shall mean the New York Stock Exchange.
"OCI Date" shall mean the first and third Fridays of each month (except
Record Date months, when it shall be first and second Friday).
"Participant" shall mean any Shareholder or a Resident of the State of
Washington who has returned an Enrollment Form or an Authorization Form to
the Company indicating election to participate in the Plan.
"Plan" shall mean the Stock Purchase and Dividend Reinvestment Plan.
"Record Date Month" shall mean the months of January, April, July, and
October.
"Resident" shall mean any person, partnership, firm, corporation,
organization, agency or other entity that is located in the State of
Washington.
"Shareholder" shall mean any holder of record of the Company's Common
Stock or Preferred Stock.
Purpose
1. What is the purpose of the Plan? The purpose of the Plan is to provide
Shareholders, and Residents of the State of Washington who are not
Shareholders, with a convenient and economical method of investing cash and
dividends in shares of the Company's Common Stock at a price determined in
the manner set forth in the answer to Question 10. Since new shares of
Common Stock may be purchased from the Company, the Company may receive
additional funds for general corporate purposes including its continuing
construction program.
Advantages
2. What are the advantages of the Plan? Participants in the Plan may:
- have cash dividends on their shares of Company stock automatically
reinvested to purchase shares of Common Stock, or receive cash
dividends on shares for which they are holders of record and invest in
shares of Common Stock by making optional cash investments of not less
than $25 per investment, up to $100,000 per calendar year, if the
Company accepts such cash investments (please refer to Question 13), or
- invest both their cash dividends and such accepted cash investments to
purchase additional shares of Common Stock.
Even though brokerage commissions are paid by Participants in connection
with purchases and sales made by a Broker in the open market under the Plan,
such fees are expected to be less than commission fees paid by individual
investors because a Participant's transactions are aggregated with those of
others for the purpose of making stock transactions in large volume. Any
such savings are thus shared by all Participants. In addition, no commission
or service charge will be paid by Participants if purchases are made
directly from the Company under the Plan (See Question 10). Full investment
of funds is possible under the Plan because the Plan permits fractions of
shares, as well as full shares, to be purchased for Participants' Plan
accounts. Dividends on all shares held in Participants' Plan accounts
including fractional shares will automatically be reinvested. Participants
will avoid the cumbersome safekeeping of certificates for shares credited to
their accounts under the Plan and regular statements of account will provide
Participants with a record of each transaction, as well as a cost history
for their shares.
Administration
3. Who administers the Plan for Participants? The Chase Manhattan
Bank,ompany as or anagent duly appointed by the Company,(the
"Administrator") administers the Plan for Participants, keeps records, sends
statements of account to Participants and performs other duties relating to
the Plan. Shares of Common Stock purchased under the Plan will be registered
in the name of the Administrator, as custodian, or in the name of a
custodian duly appointed by the Administrator to hold such shares.
Participation
4. Who is eligible to participate? All Residents of the State of
Washington and existing Shareholders are eligible to participate in the
Plan. Institutions or other persons holding shares of record in nominee or
custodial accounts for beneficial owners may also participate in the Plan.
Shareholders whose shares are held in nominee or custodial accounts may wish
to inquire of such holder regarding the opportunity to participate in the
Plan.
A person who is eligible to participate in the Plan may open an account
under the Plan in his or her own name, in the joint name of such person and
another person, or in his or her name as custodian or trustee for another
person, by completing an Enrollment Form in the appropriate manner.
5. How does an eligible person participate? Shareholders may join the
Plan by completing the Authorization Form and returning it to the
AgentCompany. Residents who are not Shareholders may join the Plan by
completing the Enrollment Form and returning it to the AgentCompany together
with an initial investment of at least $25, which is the minimum cash
investment allowed under the Plan. An Enrollment or Authorization Form and
a postage-paid return envelope may be obtained at any time by contacting:
ChaseMellon Shareholder Services, P.O. Box 476, Washington Bridge Station,
New York, NY 10033, Telephone 1-800-997-8438.
6. When may an eligible person join the Plan? An eligible person may join
the Plan at any time. If an Authorization Form specifying reinvestment of
dividends is received by the Agentthe Company on or before the record date
established for the payment of a particular dividend, reinvestment will
commence with that dividend payment. The record date normally precedes the
Dividend Payment Date by 15 to 25 days. If the Authorization Form is
received by the Agentthe Company after the record date established for the
payment of a particular dividend, then the reinvestment of dividends will
not begin until the Dividend Payment Date following the next record date
(See Question 13 for information concerning cash investments).
7. What does the Enrollment Form provide? The Enrollment Form allows
Residents who are not Shareholders to enroll and participate in the Plan.
Upon receiving the Enrollment Form with the initial cash investment, the
Agentthe Company will establish an account for the Participant and apply the
initial cash investment to the purchase of Common Stock for the
Participant's Plan account. Dividends on all shares held in the Plan account
will be automatically reinvested in additional shares of Common Stock. Once
a Resident becomes a Participant in the Plan, the Resident attains the same
status as any other Shareholder with respect to all provisions, benefits and
requirements of the Plan.
8. What does the Authorization Form provide? The Authorization Form
enables Shareholders to indicate how they wish to participate in the Plan.
By completing the appropriate instruction on the Authorization Form,
Shareholders may indicate whether they want to (A) reinvest all dividends
and any optional cash investments, or (B) invest optional cash investments
only and receive cash dividends on stock for which they are holders of
record. Dividends on all shares held in the Plan account, whether acquired
with reinvested dividends or cash investments, will automatically be
reinvested in additional shares of Common Stock.
Costs
9. Are there any expenses to Participants in connection with purchases
under the Plan? Yes. Participants are required to pay brokerage commissions
on shares of the Company's Common Stock purchased or sold by a Broker under
the Plan (See Questions 10 and 22). The Company also charges a nominal fee
for plan histories and certificate breakdowns.
Purchases Under the Plan
10. What is the price of the Common Stock purchased under the Plan? Shares
of the Company's Common Stock purchased under the Plan will, at the election
of the Company, be newly issued shares purchased directly from the Company,
shares purchased by the Broker, or a combination thereof. If shares are
purchased under the Plan directly from the Company and by a Broker, each
Participant's Plan account will be credited with its pro rata portion of the
number of shares purchased directly from the Company and by the Broker. The
Company has full discretion as to whether the Common Stock purchased under
the Plan will be purchased on the open market or purchased directly from the
Company.
a. Common Stock purchased by the Broker in the open market:
The price of the Common Stock purchased by a Broker in the open market
with reinvested dividends or with optional cash investments will be the
average total cost of such shares, including brokerage commissions,
incurred in connection with the purchase of such shares by the Broker
during the period beginning three five business days prior to any OCI
Date or Dividend Payment Date, as the case may be, and ending 20
business days after such OCI Date or Dividend Payment Date, as the case
may be. The price per share will be determined by dividing the total
cost (including all brokerage commissions) of all shares purchased by
the total number of shares purchased during any such period.
b. Common Stock purchased directly from the Company:
The price of the Common Stock purchased directly from the Company with
reinvested dividends or optional cash investments will be the average
of the high and low sale prices of shares of the Company's Common
Stock on the Dividend Payment Date or OCI Date, as the case may be.
11. How many shares of Common Stock will be purchased for Participants?
Each Participant's account will be credited with that number of shares,
including fractional shares computed to four decimal places, equal to the
amount invested with respect to his or her Plan account divided by the price
per share of such shares (as described in Question 10) for all purchases for
all Participants during the applicable period.
12. Will certificates be issued for shares of Common Stock purchased under
the Plan? Unless requested by a Participant, certificates for shares of
Common stock purchased under the Plan will not be issued. The number of
shares purchased for your account under the Plan will be shown on your
statement of account. This feature protects against loss, theft or
destruction of stock certificates.
Certificates for any number of whole shares credited to your account under
the Plan will be issued upon your written request. Any remaining full shares
and fraction of a share will continue to be credited to your account.
Certificates for fractions of shares will not be issued (See Question 21).
Your request for issuance of certificates should be sent to ChaseMellon
Shareholder Services, P.O. Box 476, Washington Bridge Station, New York, NY
10033.
Optional Cash Investments
13. Who will be eligible to make optional cash investments? Participants
are eligible to make cash investments at any time. The Agent Company may
accept or reject optional cash investments or any portion thereof. The
accepted cash investments received from a Participant on or before an OCI
Date will be used to purchase shares of Common Stock for the Participant's
Plan account on such OCI Date if the shares are purchased directly from the
Company. See Question 10(a) for a discussion of the terms of the Plan
regarding purchase of shares by a Broker with optional cash investments. OCI
Dates for cash investments are generally on the first and third Friday of
each month except in record date months (See "Definitions"). A schedule of
OCI dates is available on request.
Any Shareholder who checked the "cash investments only" [option (B)] box
on the Authorization Form will receive from the Company, on each Dividend
Payment Date, cash dividends on shares and the Agent Company will apply any
optional cash investments received to the purchase of additional shares of
Common Stock for such Shareholder's Plan account. Dividends payable on all
shares of Common Stock credited to the Plan account will be reinvested in
additional shares of Common Stock. An initial cash investment may be made by
a Shareholder when enrolling by enclosing a check or money order with the
Authorization Form.
Any Resident who is not a Shareholder must make an initial cash investment
when first enrolling in the Plan by enclosing a check or money order with
the Enrollment Form.
Checks or money orders should be payable to The Chase Manhattan BankPuget
Sound Energy, Agent, and returned along with the Authorization or Enrollment
Form in the envelope provided. Subsequent cash investments may be made at
any time by sending them to ChaseMellon Shareholder Services, DR Department,
Voluntary Cash Investment, P.O. Box 382009, Pittsburgh, PA 15250, Telephone
1-800-997-8438. No interest will be paid on optional cash investments
between date of receipt and OCI Date. Any cash investments that are rejected
by the Agent Company will be returned to the Participant as promptly as
practicable after the Agent Company elects to reject such cash investment.
There will be a $20.00 fee for returned checks.
14. What are the limitations on making optional cash investments? The
option to make cash investments is available at any time. The Agent Company
may accept or reject an optional cash investment or any portion thereof (See
Question 13). The same amount of money need not be sent each month or
quarter and you are under no obligation to make a cash investment each month
or quarter. Any cash investments must be not less than $25 per investment
nor more than $100,000 per calendar year.
15. When will shares purchased with optional cash investments be entitled
to receive dividends? Shares purchased prior to the record date for payment
of a dividend will be entitled to receive such dividend.
16. When will optional cash investments be invested? Optional cash
investments received after a given OCI Date will be held by the Agent until
the next OCI Date. OCI Dates are generally on the first and third Friday of
each month (except Record Date months, when it will be the first and second
Fridays).
Reports to Participants
17. What kind of reports will be sent to Participants in the Plan? As soon
as practicable after each investment, a Participant will receive a statement
of account. These statements are a record of the cost of purchases under the
Plan, and should be retained for tax purposes. In addition, each Participant
will receive copies of the Company's annual and quarterly reports to
shareholders, proxy statements and income tax information for reporting
dividends.
Dividends on Plan Accounts
18. Will Participants be credited with dividends on shares held in their
Plan accounts? Yes. As the record holder for Participants in the Plan, the
Agent Company will receive dividends, as declared, for all Plan shares held
on the Record Date, credit such dividends to Participants' accounts on the
basis of full and fractional shares held in these accounts, and reinvest
such dividends in additional shares of Common Stock.
Discontinuation of Dividend Reinvestment
19. How does a Participant discontinue the reinvestment of dividends under
the Plan? A Participant may discontinue the reinvestment of dividends under
the Plan by notifying the AgentCompany in writing to that effect. Notices
received by the AgentCompany not later than the record date established for
any Dividend Payment Date will be effective to discontinue dividend
reinvestment as of that date and thereafter, until the Participant again
elects to have dividends reinvested by notifying the Agent Company in
writing. Dividends on shares purchased under the Plan which are held in a
Participant's Plan account will continue to be reinvested until those shares
are withdrawn from the Participant's Plan account. Participants who wish to
receive cash dividends must withdraw shares from the Plan (see Questions 12
and 22).
Withdrawing from the Plan
20. May Participants withdraw all or a portion of their shares from the
Plan? Yes. The Plan is entirely voluntary and Participants may withdraw all
or a portion of their shares at any time. You may request that a certificate
be issued or that your shares be sold and the cash proceeds forwarded to
you. Certificates for shares of stock withdrawn will be issued for whole
shares only.
Participants withdrawing all of their shares from the Plan automatically
terminate their participation in the Plan. However, any eligible shareholder
or non-shareholder resident of the state of Washington may elect to re-
enroll at any time.
21. What happens to the fraction of a share when a Participant withdraws
all shares from the Plan? Any fractional share withdrawn will be liquidated
at the Average Price on the OCI Date preceding the day the withdrawal notice
is received by the company. The liquidated amount for any fractional share
together with certificates for whole shares will be mailed directly to the
withdrawing Shareholder.
22. How do Participants withdraw all or a portion of their shares from the
Plan? In order to withdraw from the Plan, Participants must notify the
AgentChaseMellon Shareholder Services in writing at the address shown in
Question 5. Written notice may also be provided by completing the account
correspondence stub of the statement account.
If Participants' requests are for partial withdrawals, the Participants
must specify the number of whole shares to be withdrawn and request that the
AgentChaseMellon Shareholder Services issue a certificate for, or sell, that
number of whole shares credited to their Plan account.
If Participants' requests are for full withdrawals, the Participants must
specify that the AgentChaseMellon Shareholder Services issue a certificate
for, or sell, all of the whole shares credited to their Plan account.
If Participants' requests are for their shares to be sold, the Agent
ChaseMellon Shareholder Serviceswill sell those shares as soon as
practicable after receiving the requests. The Participants will receive the
proceeds of the sale less any brokerage commission and any other fees as
soon as practicable.
If Participants' requests for a full or partial withdrawal are received by
the AgentChaseMellon Shareholder Services on or after a Dividend Record date
for a dividend payment, such requests will be processed as soon as
practicable after the records have been balanced for payment of the dividend
and such dividend has been reinvested in the participants' accounts.
Requests received at any other time will be processed as soon as
practicable.
SELLING PARTICIPANTS SHOULD BE AWARE THAT THE COMMON STOCK PRICE MAY FALL
DURING THE PERIOD BETWEEN THE WRITTEN NOTIFICATION OF SALE, ITS RECEIPT BY
THE AGENTCOMPANY AND THE ULTIMATE SALE BY THE BROKER. THIS RISK SHOULD BE
EVALUATED BY THE PARTICIPANT AND IS A RISK TO BE BORNE SOLELY BY THE
PARTICIPANT.
Other Information
23. What happens if the company has a Common Stock rights offering, issues
a stock dividend or declares a stock split? Participation in any Common
Stock rights offering will be based upon both the shares for which the
Participants have certificates and the shares (including fractional shares)
credited to Participants' Plan accounts. Any stock dividend or shares
resulting from stock splits with respect to shares in a Participant's Plan,
both full and fractional, will be credited to such accounts.
24. How will a Participant's Plan shares be voted at the Annual Meeting of
Shareholders? All shares credited to your account under the Plan will be
voted as you direct. If on the record date for a meeting of shareholders
there are shares credited to your account under the Plan, you will be sent
the proxy material for such meeting. When you return an executed proxy, it
will be voted with respect to all shares credited to you (including any
fractional share) or, if you choose, you may vote all such shares in person
at the meeting of Shareholders.
25. What are the Federal income tax consequences of participation in the
Plan? A Participant's reinvested dividends will be treated for tax purposes
in the same manner they would have been treated had a Participant received
them in cash on the applicable Dividend Payment Date. Sale of shares by the
Plan on behalf of a Participant will be treated for tax purposes as a sale
of such shares by the Participant. This summary of Federal income tax
consequences is only a brief general statement of complex tax laws which are
subject to change at any time. In order to determine the tax basis for
shares or any fraction of a share credited to a Participant's Plan account,
the applicable holding requirement and all other tax consequences of
participation in the Plan, Participants are advised to consult with their
tax advisors.
26. What is the responsibility of the Company under the Plan? Neither
Puget Sound Energy or will the Agent ChaseMellon Shareholder Serviceswill be
liable for any act done in good faith or for any good faith omission to act,
including, without limitation, any claim of liability arising out of failure
to terminate a Participant's account upon such Participant's death.
Participants should recognize that the Company cannot provide any
assurance of a profit or protection against loss on any shares purchased
under the Plan.
27. May the Plan be changed or discontinued? While the Company expects to
continue the Plan indefinitely, the Company reserves the right to suspend or
terminate the Plan at any time. It also reserves the right to make
modifications to the Plan. Participants will be notified of any such
suspension, termination or modification.
USE OF PROCEEDS
The net proceeds from time to time from the sale of the Common stock
offered pursuant to the Plan will be used for general corporate purposes
including financing the Company's construction program.
COMMON STOCK
General
The following is a summary of certain information relating to the Common
Stock. This summary does not purport to be complete and is qualified by
reference to the Company's Articles of Incorporation, Mortgage Indenture and
the Washington Business Corporation Act.
The Common Stock issued under the Plan will be fully paid and non
assessable.
Dividends
After payment or setting aside of cumulative dividends and mandatory
sinking fund requirements, where applicable, on all outstanding issues of
Preferred Stock, dividends may be paid on the Common Stock out of funds
legally available therefor when declared by the Board of Directors.
Certain provisions relating to the Company's senior securities limit the
funds available for payment of dividends to net income available for
dividends on Common Stock (as defined in the Company's Mortgage Indenture)
accumulated after December 31, 1957, plus the sum of $7.5 million. As of
November 30, 1996, the balance of earnings reinvested in the business that
was not restricted as to dividends on Common Stock was approximately $237
million.
Voting Rights
The holders of the Common Stock are entitled to one vote per share, have
exclusive voting rights (except as referred to below) and are entitled to
cumulative voting in electing directors. Directors are elected to staggered
three-year terms.
Whenever dividends on Preferred Stock are in arrears in an amount
equivalent to four quarterly dividends, the holders of such stock shall be
entitled, until all such dividends shall have been paid, to elect not less
than a majority of the Board of Directors. The vote of the holders of
specified percentages of Preferred Stock is required to effect various
changes in the capital structure of the Company and certain other
transactions.
Liquidation Rights
In the event of any liquidation, dissolution or winding up of the Company,
after satisfaction of preferential rights of Preferred Stock, the holders of
Common Stock are entitled to share ratably in the distribution of all
remaining net assets of the Company.
Preemptive Rights
Holders of the Company's stock do not have preemptive rights to subscribe
for or purchase stock of the Company of any class, or securities convertible
into stock.
Shareholder Rights Plan
In January 1991, the Company's Board of Directors approved a Rights
Agreement (the "Rights Agreement") designed to deter partial and two-tier
tender offers, stock accumulation programs and other coercive tactics that
might be used to gain control of the Company without giving the Company's
Board of Directors the opportunity to negotiate on behalf of the Company's
shareholders. Pursuant to the Rights Agreement, the Board of Directors
declared a dividend of one preference share purchase right for each share of
the Company's Common Stock outstanding on January 15, 1991, and authorized
the issuance of one such right with respect to each additional share of
Common Stock issued after that date. A holder of a right may, under certain
circumstances, purchase at a discount from market value either shares of a
special class of preference stock of the Company (entitled to dividends and
to substantial redemption, liquidation or exchange rights) or shares of
capital stock of a corporation entity attempting to acquire the Company or
surviving a merger or consolidation with the Company. The Board of Directors
has initially reserved for issuance upon exercise of the rights 8150,000
preference shares.
Washington Statute
Washington law contains certain provisions that may have the effect of
delaying or discouraging a hostile takeover of the Company. Chapter 23B.19
of the Washington Business Corporation Act prohibits, subject to certain
exceptions, a corporation from entering into any "significant business
transactions" with an "Acquiring Person" (defined generally as a person or
affiliated group who acquires 10% or more of the outstanding voting
securities of a corporation without the prior approval by the corporation's
board of directors) for a period of five years after such person or
affiliated group becomes an Acquiring Person. In addition, pursuant to
Chapter 23B.17 of the Washington Business Corporation Act, the Company is
subject to a "fair price" restriction that provides, subject to certain
exceptions, that any merger, sale of substantially all of a corporation's
assets or dissolution or liquidation involving an "Interested Shareholder"
(defined generally as a person or affiliated group that beneficially owns
20% or more of a corporation's outstanding voting securities) will be
prohibited unless determined by a majority of the corporation's
disinterested directors to be at a "fair price" or otherwise approved by
either a majority of the corporation's disinterested directors of two-thirds
of the disinterested shareholders entitled to vote on the transaction.
Transfer Agents and Registrars
The Transfer Agents and Registrars for the Company are ChaseMellon
Shareholder Services, Overpeck Centre, 85 Challenger Road, Ridgefield Park,
NJ 07660.
LEGAL OPINIONS
The validity of the Common Stock offered hereby has been passed upon by
Perkins Coie, Seattle, Washington.
EXPERTS
The financial statements and financial statement schedules included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995,
incorporated by reference in this Prospectus, have been incorporated herein
in reliance on the report of Coopers & Lybrand, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
